Gas will be an essential part of the future energy mix as the world moves to a low-carbon future; playing a significant role in reducing carbon emissions and air pollution, and being a secure, diverse and flexible energy supply.
Gas is a readily available source of energy for countries throughout the world. However, providing customers access to gas involves joining the whole supply chain from end to end. Countries, which are not connected to gas pipelines will require investments in liquefied natural gas (LNG) import facilities to be able to use this cleanest burning fossil fuel, which can also bring energy security and cost competitiveness. One of the challenges is enabling the investment in gas infrastructure, which can be high cost, low return and with a long payback period.
As long term energy policies are predominantly driven by government regulations and public opinion, governments have a unique position to create regulatory environments to enable public and private companies to make long term energy investments that provide benefits for society. Some of the policy tools include import tariffs, subsidies, tax credits, import licenses, permits and market security.
There are many positive examples around the world where people gain access to gas for the first time. Unfortunately, there are also many examples where there is significant demand for gas, and due to a lack of gas infrastructure, these countries remain at the edge where they want the benefits of gas and yet are unable to gain access.
Governments that have successfully enabled long-term investments across the gas supply chain, including investments in LNG regasification terminals, predominantly do so in three ways:
Several governments in recent years have successfully developed regasification infrastructure. The reasons for governments to invest directly include:
These countries include Singapore, Lithuania, Jordan, Egypt and Indonesia.
There are also countries that successfully enabled private investment in regasification infrastructure, primarily by underwriting investment risk by means of taking terminal capacity. Examples include Dubai and Pakistan.
For the third group, some countries create an enabling investment environment through policy and regulation which allows the private sector to make long term gas infrastructure investment decisions, without government intervention. Successful examples include India, United Kingdom, Netherlands and Norway.
Additionally, public and private companies can play the role of supplier, developer, technical adviser, and other roles in the whole value chain to help bring gas to customers who need it.
In conclusion, the future development of gas markets will depend on the successful collaboration between governments, public and private companies, and end users. We need to work together to overcome challenges to build sustainable regulatory, financial and physical frameworks that facilitate investment, not only in traditional markets but increasingly in emerging markets.
Share your insights and join the conversation: Do you agree with Mr MacTaggart's view on the need of collaboration to develop the gas markets? Leave your comment below.
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